There will be smiles on small businesses in Uganda all way to the bank, having been given an opportunity to access borrowing facility at Equity Bank. The bank penned an accord last week with the European Investment Bank (EIB).
In a statement issued by EIB, the Uganda subsidiary of the Equity Group will have access to €19m (Shs74b) credit facility.
EIB, a long-term lending arm of the European Union, signed €75m (Shs291b) loan facility with the Equity Group, based in Kenya, part of which will be coming to the Uganda subsidiary.
“The on-lending will be available in US dollars or local currencies with the objective of contributing to job creation and poverty reduction,” reads a press statement issued in Kampala by EIB last week.
The Equity Group has subsidiaries in Uganda, Tanzania and the DRC with all receiving a portion of the funding from the EIB to support small enterprises.
“With this facility of €75m we will be in a position to support up to 1,000 regional companies with an average loan of nearly Ksh10m (Shs350m) each thus assisting develop local entrepreneurs to compete at regional level furthering integration and cross-border trade,” said Mr James Mwangi, the chief executive officer and chairman of Equity Group.
The Equity Group has often, mostly in Kenya pegged itself as the bank for SME’s. In Uganda, it entered the market in 2008 when it acquired Uganda Microfinance Limited and has struggled to replicate the same model as in Kenya. However, with the availability of such long-term finances, it would be able to attract small businesses to its fold.
“The credit lines signed today will not only benefit people in Kenya but are meant for people in neighboring countries as well. The EIB is committed to supporting Kenyan banks in providing credit to the young and growing population in the region. Kenya is increasingly becoming a hub for the region on many levels and us as a bank must look at this from a very basic point of view: there is a young and growing population with enormous potential, you need credit to support that momentum,” explained EIB vice president Pim van Ballekom.